How many credit cards should you have?

In this article, we will discuss the number of credit cards you should own. We will talk about the benefits and risks of having a large number of credit cards and provide some tips on how to manage your cards.

Benefits of Having Multiple Credit Cards

With many credit cards offering different perks and benefits, you can have multiple cards for specific purposes. For instance, you may have a credit card that offers better rewards on grocery purchases, another that provides better rewards for dining at restaurants, and another card that does not charge foreign transaction fees.

As credit card companies continuously offer new cards with better benefits and promotional periods, signing up for credit cards is called “credit card churning.” There is a system that must be carefully followed to avoid falling into debt and credit card issues.

Having multiple credit cards can also help you maintain certain finances separately. For example, you might use one credit card for personal expenses and another credit card for business expenses.

How Many Credit Cards is Too Many?

According to FICO, individuals with the highest credit scores typically have seven credit cards. This number is an average, meaning it is possible to have more than seven credit cards and still maintain a high credit score. However, high balances on your credit cards—regardless of their number—can negatively impact your credit score. Keeping your credit utilization low, paying off your balance in full each month, and not spending more than you can afford are other factors that contribute to achieving an excellent credit score.

The number of credit cards you have is not as important as how you manage them. The key to having multiple credit cards is to maintain appropriate credit usage, pay off the balance in full each month, and not spend more than you can afford. You should be in control of your spending and practice restraint to avoid accumulating debt that you cannot handle.

Risks of Having a Large Number of Credit Cards

The more credit cards you have, the more careful you need to be in tracking your balances and due dates, especially if you have balances on multiple credit cards. Using a calendar or reminders can be helpful to ensure that you meet deadline requirements.

Having a large number of open credit cards can negatively affect your ability to obtain a mortgage loan. Many banks consider your available credit along with the amount you owe. The ability to accumulate high debt on credit cards can prevent you from securing a mortgage loan.

If you prove that you can handle credit responsibly, credit card companies are more willing to grant you credit cards with higher credit limits. Having too much available credit can be tempting. If you tend to carry a balance on your credit card, it is best to limit the number of credit cards you own. This way, you won’t increase your debt costs by paying interest on multiple credit card balances.

Regardless of how many credit cards you actually own, it is best to carry no more than two or three at a time. You will have a backup credit card in case your primary credit card is declined, but you will also minimize your losses in case your wallet is lost or stolen.

Ultimately, you should consider your personal ability to manage credit and your individual needs when determining how many credit cards to own. There is no ideal number of credit cards that everyone should have, but what’s most important is being able to manage the cards you do own effectively and responsibly.

Sources:
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– Guinness World Records. “Largest Collection of Valid Credit Cards.”
– Experian. “What Is the Average Number of Credit Cards per US Consumer?”
– FICO. “myFICO Reveals Techniques of People With the Highest Credit Scores in the Nation.”

Source: https://www.thebalancemoney.com/how-many-credit-cards-should-you-have-4177862